Annual Management Report of Fund Performance

Transcription

1 December 31, 2016 Annual Management Report of Fund Performance This annual management report of fund performance contains financial highlights but does not contain the complete annual financial statements of the investment fund. If you have not received a copy of the annual financial statements with this report, you can get a copy of the annual financial statements at your request, and at no cost, by calling , by writing to us at 5000 Yonge Street, Suite 900, Toronto ON M2N 0A7, or by visiting our website at or SEDAR at Securityholders may also contact us using one of these methods to request a copy of the investment fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure.

2 Lead Manager Donald Huber, CFA Franklin Templeton Institutional, LLC (Sub-Advisor) Industry Experience: 30 years Location: New York, NY INVESTMENT OBJECTIVE AND STRATEGIES Franklin Global Growth Fund (the Fund ) aims to grow investors capital over the long term by investing primarily in equity securities of growth companies, with any market size capitalization, located throughout the world. Through fundamental research, the Fund s sub-advisor (the portfolio manager ) seeks to create a diversified portfolio of sustainable, highquality growth companies that it believes offer the most attractive investment opportunities. In evaluating individual companies, the portfolio manager focuses primarily on growth, quality and valuation criteria. These factors include understanding whether a company offers a sustainable business model with attractive free cash-flow characteristics, and whether there is proven management focused on the creation of shareholder value, as well as utilizing a consistent valuation approach to understand the relative attractiveness of an investment opportunity. In addition to selecting securities from Canada, the United States and industrialized countries that make up the Morgan Stanley Capital International EAFE Index (Europe, Australia and the Far East), the Fund may invest up to 20% of its total assets in common stocks of issuers located in emerging-market nations and up to 35% of its total assets in debt securities. The Fund may also, when suitable opportunities are available, invest in initial public offerings of securities and may invest a small portion of its assets in private companies or illiquid securities. RISK The risks of investing in the Fund remain as stated in the prospectus. The Fund is suitable for investors with a medium- to long-term investment horizon and medium risk tolerance, and who are seeking a fund investing globally in high-growth-potential companies. RESULTS OF OPERATIONS As at December 31, 2016, total net asset value of the Fund was $102.2 million, a decrease of 18.6% from December 31, This was primarily driven by $19.7 million in net redemptions and a $3.6 million decrease in net assets from operations. The Fund paid out $54,000 in cash distributions to unitholders. During the past year, the Fund s Series A units generated total returns of 4.3%. Over the same time period, the Fund s benchmark, the MSCI World Index (Net of Dividends), hereinafter referred to as the Index, returned 3.8%. The MSCI World Index (Gross of Dividends) returned 4.4%. On December 31, 2016, the Fund changed its primary benchmark to the MSCI World Index (Net of Dividends) to better reflect the impact of dividends on investors who reside in jurisdictions outside the base countries of many global stocks. The performance of the Fund s other series is substantially similar to that of its Series A units, except for differences in expense structure. For the return of the Fund s other series (if applicable), please refer to the Past Performance section. The Fund underperformed the Index during the reporting period, as negative stock selection drove relative underperformance. In general, growth stocks underperformed value stocks, as investors favoured deep-cyclical stocks, US banks and global energy companies over the higher-quality names in which the Fund typically invests. As a result, stock selection in the Consumer Discretionary and Industrials sectors detracted from relative returns. In the Consumer Discretionary sector, China-based Vipshop Holdings Ltd., an Internet flash sale operator, detracted from relative returns. The growth of the company decelerated during the year as the company grew in size. However, Vipshop remains well placed to benefit from strong consumer demand and retailers looking to move excess inventory. Other detractors included Merlin Entertainments PLC, a UK-based amusement park operator, and Delphi Automotive PLC, an auto parts supplier, on concerns about slowing growth. The portfolio manager expects automakers to use a greater amount of Delphi s content in their cars as the trends toward active safety, infotainment and autonomous driving continue. In Industrials, Noble Group Ltd., a Hong Kong-based commodities trader, detracted from relative performance. During the year, the company undertook a number of steps to strengthen its balance sheet and should be better positioned for an upswing in commodities prices. Health Care-sector detractors included US-based athenahealth Inc., a cloud-based services provider for the health care industry; US-based biotechnology companies Regeneron Pharmaceuticals, Inc., and ACADIA Pharmaceuticals Inc.; and Roche Holding AG, a Swiss drug maker. The US biotechnology names were weak on drug pricing uncertainty, despite possessing what the portfolio manager believes are strong product pipelines. Meanwhile, athenahealth continues to build its presence in the inpatient market, and its core market remains strong despite uncertainty surrounding changes to US health care law. Other detractors included Japanese social media company LINE Corp. in Information Technology and US-based Telecommunications Services stock Level 3 Communications Inc. Despite a weak third-quarter profit report, the portfolio manager expects LINE to grow strongly as it expands from a mobile messaging app to a broader media portal that generates advertising revenue. Conversely, in the Health Care sector, Cochlear Ltd., an Australia-based hearing implant manufacturer, contributed to relative performance. Cochlear s new product continues to gain market share, and the company remains well positioned to take advantage of a processor upgrade cycle for older implants. Information Technology stock MercadoLibre Inc., an Argentina-based online marketplace, contributed to relative performance. MercadoLibre has benefitted from strong growth across Latin America, as well as from

3 greater adoption of its payment services. Germany-based chipmaker Infineon Technologies AG was another contributor on strong demand for its chips used in cars and other industrial applications. Financials stock Partners Group Holding AG, a Swiss alternative asset manager, contributed to relative performance. The company has seen strong inflows as investors continue to look for higher returns in a lowinterest-rate environment. The rebound in oil prices late in the year supported Energy stocks Schlumberger NV, a US-based oilfield services company, and Core Laboratories NV, a US-based reservoir description company. Industrials stocks MTU Aero Engines AG, a Germany-based aircraft engine manufacturer, and Rockwell Automation, Inc., a US-based industrial automation products provider, contributed to relative returns on optimism about a pickup in global industrial production. In terms of sector allocations, an overweighting in Health Care and underweighting in Energy detracted from relative returns. However, an underweighting in Consumer Staples and overweighted positions in Industrials and Information Technology contributed. Regionally, an overweighting in Europe and underweighting in the United States curbed relative performance. Conversely, an underweighting in Japan was beneficial. Index performance comparison information is provided for reference only. It is important to note that the Fund s return reflects the effect of fees and expenses for professional management, while an index does not have such costs. Average net assets of the series of the Fund that bear expenses have remained relatively flat for the year ended December 31, 2016, resulting in expenses remaining relatively unchanged during the period. Income decreased due to the results of the Fund s investment activities, including, but not limited to, those previously discussed for the period in review. RECENT DEVELOPMENTS After investors experienced a year marked by Brexit in the United Kingdom and Donald Trump s election win in the United States, the portfolio manager believes political uncertainty will likely persist in This uncertainty could create the potential for markets to trade not on underlying corporate fundamentals, but rather on news headlines and the rhetoric and speculation about policy changes coming out of a number of Western capitals. Economic data are likely to continue to show only a modest global recovery, and although the US Federal Reserve may continue to raise interest rates over the course of 2017, the European Central Bank and Bank of Japan are likely to continue purchasing assets. Additionally, a stronger US dollar is likely to influence trading in the United States, as equity markets are trading near the top of their historic valuation range, according to the portfolio manager s analysis. With US stocks potentially struggling to continue to reach new highs, the portfolio manager sees greater opportunities to invest in best-inclass non-us companies that are positioned to take advantage of growth opportunities around the world. Moreover, unlike US stocks, many of these companies have traded sideways over the past few years and their valuations look more compelling to the portfolio manager. Although political rhetoric, a changing regulatory regime and potentially more protectionist policies may influence how markets trade from day to day in 2017, the portfolio manager believes fundamentals ultimately will matter. As markets get more clarity on the emerging policy backdrop, the portfolio manager believes those companies with strong growth potential that was overlooked by the market during the late-2016 rotation into low-quality stocks should fare well over the longer term. On September 30, 2016, Franklin World Growth Fund changed its name to Franklin Global Growth Fund. The decision was made to better align the Fund s name to the other global mandates under its portfolio manager. There will be no changes to the Fund s investment strategy, philosophy or research process. FORWARD-LOOKING STATEMENTS Investors should take note that certain statements in this report about a fund, including its strategy and expected future performance, are forward-looking. Forward-looking statements are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as may, will, should, could, expect, anticipate, intend, plan, believe, or estimate or other similar expressions. Any statement that is made concerning future strategies or performance is also a forward-looking statement. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the forward-looking statements. The forward-looking statements are by their nature based on numerous assumptions, which include, amongst other things, that (i) the Fund can attract and maintain investors and has sufficient capital under management to effect its investment strategies, (ii) the investment strategies will produce the results intended by the sub-advisor, and (iii) the markets will react and perform in a manner consistent with the investment strategies. Although the forward-looking statements contained herein are based upon what the sub-advisor believes to be reasonable assumptions, the sub-advisor cannot assure that actual results will be consistent with these forward-looking statements. Forward-looking statements are not guarantees of future performance. Any number of factors could contribute to differing results, including, among other things, general economic, political and market factors, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings and catastrophic events. This list of factors is not exhaustive. Investors should not place undue reliance on forward-looking information and should be aware that the Fund may not update any forward-looking statements, whether as a result of new information, future events or otherwise.

4 RELATED PARTY TRANSACTIONS The manager is an indirect wholly-owned subsidiary of Franklin Resources, Inc., a global investment management organization known as. The Manager is the manager, registrar and transfer agent and a principal distributor of the Fund. The Manager provides or arranges for the provision of these services for day-to-day Fund operations, including the marketing, promotion and distribution of the Fund and portfolio advisory services. In consideration of these management and portfolio advisory services, the Fund pays the Manager a monthly management fee based on the average net asset value of each series of the Fund (except Series O and OT as applicable), calculated daily, as set out under Management Fees below. During the year ended December 31, 2016, the Fund paid management fees of $291,000 (2015 $307,000). Franklin Templeton Services, LLC (FTS) provides the Manager fund accounting and portfolio valuation services in connection with the Fund, and provides certain back office administration services to the Manager. The Administration Fee, as discussed below, covers the cost of the services provided by FTS. The Manager pays the operating expenses of the Fund, other than certain Fund Costs which include, but are not limited to, the cost of compliance with new governmental and regulatory requirements, fees and expenses of the Fund s Independent Review Committee (IRC), borrowing and interest costs and investor meeting costs (as permitted by Canadian securities regulation) in exchange for the payment by the Fund to the Manager of an annual fixed-rate administration fee of 0.33% applied against the average daily net assets of the Fund ( Administration Fee ), except for Series PF, which has an annual Administration Fee of 0.15%, and Series O and OT, which have no annual Administration Fee. The Manager will pay all operating expenses of Series O and OT, as applicable, as part of its agreement with each investor. The Manager may, at its discretion, waive a portion of a series Administration Fee or absorb certain Fund Costs. During the year ended December 31, 2016, the Fund paid Administration Fees of $57,000 (2015 $60,000) to the Manager. During the year ended December 31, 2016, the Manager waived Fund Costs of $2,000 (2015 $2,000). As at December 31, 2016, Franklin Global Growth Corporate Class and Franklin Quotential Global Growth Portfolio held 53% and 13% of the Fund, respectively. Portfolio Advisor Corp. (the Portfolio Advisor ) and Franklin Templeton Institutional, LLC (the Sub-Advisor ) provide investment analysis and recommendations and execute or arrange for brokers to execute portfolio transactions. Principal Distributor As a principal distributor of the Fund, the Manager markets the Fund and arranges for the sale of the Fund through dealers across Canada. The Manager may retain companies to assist in the sale of the Fund under the deferred sales charge option. The Manager s affiliate, FTC Investor Services Inc. ( FTC ISI ), also acts as a principal distributor for Series F, O, OT and FT units of the Fund, as applicable. For acting as a principal distributor of the applicable series, FTC ISI receives an inter-company service fee of 0.20% from the Manager with respect to those units. Registrar and Transfer Agent In addition to its management and portfolio advisory services, the Manager acts as the registrar and transfer agent of the Fund. These services are provided by the Manager in the normal course of operations and are part of the services provided by the Manager in exchange for the Administration Fee paid by the Fund to the Manager. Standing Instructions from the Independent Review Committee The Manager relied on standing instructions from the IRC with respect to the allocation of any operating expenses not covered by the Administration Fee. The Manager relied, or may rely, on standing instructions from the IRC in respect of securities trades amongst mutual funds, investment funds or managed accounts managed by the Manager or an affiliate of the Manager. In both cases, the standing instructions require the Manager to comply with the policies and procedures presented to the IRC with respect to the above matters and to provide periodic reports to the IRC in accordance with NI MANAGEMENT FEES A portion of the management fee paid by the Fund to the Manager is for trail fees and sales commissions the Manager pays to dealers ( Dealer Compensation ). The trail fees are a percentage of the daily average net asset value of each series of the Fund, which is held by the dealer s clients. The remaining portion of the management fee is used to pay for portfolio advisory and administrative services related to the provision of portfolio advisory services. The table below outlines the Fund s annual management fees, as well as the portion of the management fee used to pay for Dealer Compensation and for portfolio advisory services as an approximate percentage of the management fee for each series: Series Management Fees (%) Dealer Compensation (%)* A F PF T Investment management, general administration and other (%) * Dealer compensation may include other fees related to distribution, which are not payable directly to dealers.

5 The management and administration fees for Series O is paid for by the unitholder directly to the Manager as follows: First C$200,000 to under $2.5 million 0.95% Next C$2.5 million to under $5 million 0.80% C$5 million and over 0.75% Certain institutional investors may negotiate the management and administration fees by written agreement with Franklin Templeton Investments.

6 Summary of Investment Portfolio (AS AT DECEMBER 31, 2016) REGIONAL WEIGHTINGS (%)* North America Europe Asia 6.10 Australia & New Zealand 4.46 Middle East & Africa 2.89 Latin America & Caribbean 2.46 INDUSTRY WEIGHTINGS (%)* Capital Markets 8.86 Biotechnology 8.34 Software 7.85 Banks 6.71 Energy Equipment & Services 5.49 Professional Services 5.45 Chemicals 5.21 Internet Software & Services 5.19 Health Care Equipment & Supplies 4.91 Pharmaceuticals 4.26 Textiles, Apparel & Luxury Goods 3.88 Auto Components 3.27 Semiconductors & Semiconductor Equipment 2.90 Technology Hardware, Storage & Peripherals 2.89 Aerospace & Defense 2.88 Insurance 2.79 IT Services 2.77 Road & Rail 2.69 Health Care Technology 2.42 Internet & Direct Marketing Retail 2.39 Household Products 2.34 Trading Companies & Distributors 1.73 Hotels, Restaurants & Leisure 1.45 ASSET CLASS WEIGHTINGS (%) Common Stocks Short-term securities and all other assets, net 3.33 TOP 25 HOLDINGS (%) Lazard Ltd., A 3.46 Signature Bank 3.45 Delphi Automotive PLC 3.27 KBC Groep NV 3.25 Cash and cash equivalents** 3.08 Alkermes PLC 3.07 Adobe Systems Inc Infineon Technologies AG 2.90 Apple Inc Check Point Software Technologies Ltd MTU Aero Engines AG 2.88 Core Laboratories NV 2.84 St. James s Place Capital PLC 2.79 Partners Group Holding AG 2.77 Verisk Analytics Inc Visa Inc., A 2.77 CoStar Group Inc Roche Holding AG 2.70 Umicore SA 2.70 DSV AS 2.69 SGS SA 2.67 Schlumberger Ltd Intercontinental Exchange Inc Cochlear Ltd Burberry Group PLC 2.54 TOTAL NET ASSET VALUE: $102,185,243 * Excluding short-term securities and all other assets, net. ** Cash and cash equivalents may include bonds that have a remaining term to maturity of 365 days or less that are issued by certain governments, supranational agencies or financial institutions and have a designated rating (as defined in Canadian securities law). Above is an outline of the investments held in the Fund as a percentage of the Fund s net assets. Due to ongoing portfolio transactions, the investments and percentages may have changed by the time you purchase units of the Fund. The top 25 holdings are made available quarterly, 60 days after the quarter-end. To obtain a copy, please contact a member of our client services team at or visit

7 Series A (AS AT DECEMBER 31, 2016) FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the fiscal periods ended December 31. Net assets per unit (1) Net assets beginning of period $15.29 $13.78 $12.55 $10.25 $8.83 Increase (decrease) from operations: Total revenue Total expenses (0.36) (0.38) (0.33) (0.29) (0.26) Realized gains (losses) for the period Unrealized gains (losses) for the period (1.69) (1.46) (0.94) Total increase (decrease) from operations (2) (0.75) Distributions: From income (excluding dividends) From dividends (0.24) (0.27) (0.22) (0.16) (0.17) From capital gains (0.12) (0.34) Returns of capital Total annual distributions (3) (0.36) (0.61) (0.22) (0.16) (0.17) Net assets end of period $14.27 $15.29 $13.78 $12.55 $10.25 Ratios and supplemental data: Total net asset value ($ millions) (1) $9.41 $11.45 $9.95 $10.80 $10.43 Number of units outstanding 659, , , ,509 1,017,436 Management expense ratio (2) 2.57% 2.56% 2.56% 2.61% 2.62% Management expense ratio before waivers or absorptions 2.57% 2.56% 2.56% 3.60% 3.69% Trading expense ratio (3) 0.07% 0.13% 0.10% 0.18% 0.11% Portfolio turnover rate (4) 33.17% 58.84% 38.14% 61.39% 47.85% Net asset value per unit $14.27 $15.29 $13.78 $12.55 $10.25 For explanatory notes, please refer to Explanatory Notes to Financial Highlights at the end of the section. The opening net assets have been adjusted in accordance with IFRS without restatement of prior periods. Information pertaining to years 2012 and prior was derived from the audited annual financial statements prepared under Canadian GAAP. PAST PERFORMANCE The following information assumes that all distributions made by the Fund in the periods shown were reinvested in additional securities of the Fund and does not take into account sales, redemption, distribution or other optional charges that would have reduced returns. Past performance does not necessarily indicate how the Fund will perform in the future. Year-by-Year Returns The bar chart shows the Fund s annual performance for each of the years shown, and illustrates how the investment Fund s performance has changed from year to year. In percentage terms, the bar chart indicates how much an investment made on January 1 would have grown or decreased by the December 31 of each year shown. 50% 25% 0% -25% * % 17.8% 24.1% 11.6% 15.3% -4.3% Annual Compound Returns The table shows the annual compound total returns for each of the periods shown ended December 31, The returns are compared against the benchmark(s) over the same period. 1 Year 3 Years 5 Years 10 Years Since Inception Series A Units 4.3% 7.2% 12.5% N/A 8.9% MSCI World Index (Net of Dividends) 3.8% 12.2% 16.7% N/A 14.3% MSCI World Index (Gross of Dividends) 4.4% 12.8% 17.3% N/A 15.0% For a definition of the benchmark(s), please refer to Benchmark(s) Information at the end of the section. -50% * 2011 Series A returns: June 24 to December 31

8 Series F (AS AT DECEMBER 31, 2016) FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the fiscal periods ended December 31. Net assets per unit (1) Net assets beginning of period $16.09 $14.34 $12.91 $10.42 $8.88 Increase (decrease) from operations: Total revenue Total expenses (0.22) (0.23) (0.19) (0.17) (0.15) Realized gains (losses) for the period Unrealized gains (losses) for the period (2.08) (1.47) (0.93) Total increase (decrease) from operations (2) (0.89) Distributions: From income (excluding dividends) From dividends (0.26) (0.28) (0.23) (0.17) (0.18) From capital gains (0.12) (0.35) Returns of capital Total annual distributions (3) (0.38) (0.63) (0.23) (0.17) (0.18) Net assets end of period $15.17 $16.09 $14.34 $12.91 $10.42 Ratios and supplemental data: Total net asset value ($ millions) (1) $1.84 $5.90 $5.06 $5.04 $4.42 Number of units outstanding 121, , , , ,901 Management expense ratio (2) 1.45% 1.45% 1.45% 1.49% 1.50% Management expense ratio before waivers or absorptions 1.45% 1.45% 1.45% 1.70% 1.71% Trading expense ratio (3) 0.07% 0.13% 0.10% 0.18% 0.11% Portfolio turnover rate (4) 33.17% 58.84% 38.14% 61.39% 47.85% Net asset value per unit $15.17 $16.09 $14.34 $12.91 $10.42 For explanatory notes, please refer to Explanatory Notes to Financial Highlights at the end of the section. The opening net assets have been adjusted in accordance with IFRS without restatement of prior periods. Information pertaining to years 2012 and prior was derived from the audited annual financial statements prepared under Canadian GAAP. PAST PERFORMANCE The following information assumes that all distributions made by the Fund in the periods shown were reinvested in additional securities of the Fund and does not take into account sales, redemption, distribution or other optional charges that would have reduced returns. Past performance does not necessarily indicate how the Fund will perform in the future. Year-by-Year Returns The bar chart shows the Fund s annual performance for each of the years shown, and illustrates how the investment Fund s performance has changed from year to year. In percentage terms, the bar chart indicates how much an investment made on January 1 would have grown or decreased by the December 31 of each year shown. 50% 25% 0% -25% * % 19.1% 25.6% 12.9% 16.6% -3.3% Annual Compound Returns The table shows the annual compound total returns for each of the periods shown ended December 31, The returns are compared against the benchmark(s) over the same period. 1 Year 3 Years 5 Years 10 Years Since Inception Series F Units 3.3% 8.4% 13.7% N/A 10.1% MSCI World Index (Net of Dividends) 3.8% 12.2% 16.7% N/A 14.3% MSCI World Index (Gross of Dividends) 4.4% 12.8% 17.3% N/A 15.0% For a definition of the benchmark(s), please refer to Benchmark(s) Information at the end of the section. -50% * 2011 Series F returns: June 24 to December 31

9 Series O (AS AT DECEMBER 31, 2016) FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the fiscal periods ended December 31. Net assets per unit (1) Net assets beginning of period $17.22 $15.13 $13.43 $10.68 $8.96 Increase (decrease) from operations: Total revenue Total expenses Realized gains (losses) for the period Unrealized gains (losses) for the period (1.97) (1.28) (1.11) Total increase (decrease) from operations (2) (0.48) Distributions: From income (excluding dividends) From dividends (0.28) (0.30) (0.24) (0.18) (0.18) From capital gains (0.13) (0.38) Returns of capital Total annual distributions (3) (0.41) (0.68) (0.24) (0.18) (0.18) Net assets end of period $16.48 $17.22 $15.13 $13.43 $10.68 Ratios and supplemental data: Total net asset value ($ millions) (1) $86.83 $ $ $ $ Number of units outstanding 5,268,115 6,240,006 11,024,873 19,315,535 23,672,985 Management expense ratio (2) Management expense ratio before waivers or absorptions 0.04% 0.03% Trading expense ratio (3) 0.07% 0.13% 0.10% 0.18% 0.11% Portfolio turnover rate (4) 33.17% 58.84% 38.14% 61.39% 47.85% Net asset value per unit $16.48 $17.22 $15.13 $13.43 $10.68 For explanatory notes, please refer to Explanatory Notes to Financial Highlights at the end of the section. The opening net assets have been adjusted in accordance with IFRS without restatement of prior periods. Information pertaining to years 2012 and prior was derived from the audited annual financial statements prepared under Canadian GAAP. PAST PERFORMANCE The following information assumes that all distributions made by the Fund in the periods shown were reinvested in additional securities of the Fund and does not take into account sales, redemption, distribution or other optional charges that would have reduced returns. Past performance does not necessarily indicate how the Fund will perform in the future. Year-by-Year Returns The bar chart shows the Fund s annual performance for each of the years shown, and illustrates how the investment Fund s performance has changed from year to year. In percentage terms, the bar chart indicates how much an investment made on January 1 would have grown or decreased by the December 31 of each year shown. 40% 20% 0% -20% * % 37.8% 5.1% -8.0% 20.9% 27.5% 14.5% 18.3% -1.9% Annual Compound Returns The table shows the annual compound total returns for each of the periods shown ended December 31, The returns are compared against the benchmark(s) over the same period. 1 Year 3 Years 5 Years 10 Years Since Inception Series O Units 1.9% 9.9% 15.4% N/A 8.1% MSCI World Index (Net of Dividends) 3.8% 12.2% 16.7% N/A 8.4% MSCI World Index (Gross of Dividends) 4.4% 12.8% 17.3% N/A 9.1% For a definition of the benchmark(s), please refer to Benchmark(s) Information at the end of the section. -40% * 2008 Series O return: March 10 to December 31

10 Series PF (AS AT DECEMBER 31, 2016) FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the fiscal periods ended December 31. Net assets per unit (1) 2016 Net assets initial offering price* $10.00 Increase (decrease) from operations: Total revenue 0.02 Total expenses (0.03) Realized gains (losses) for the period (0.07) Unrealized gains (losses) for the period 1.36 Total increase (decrease) from operations (2) 1.28 Distributions: From income (excluding dividends) From dividends (0.17) From capital gains (0.08) Returns of capital Total annual distributions (3) (0.25) Net assets end of period $9.74 Ratios and supplemental data: 2016 Total net asset value ($ millions) (1) $3.55 Number of units outstanding 364,446 Management expense ratio (2) 1.09% Management expense ratio before waivers or absorptions 1.09% Trading expense ratio (3) 0.07% Portfolio turnover rate (4) 33.17% Net asset value per unit $9.74 For explanatory notes, please refer to Explanatory Notes to Financial Highlights at the end of the section. * The Series was launched on October 3, PAST PERFORMANCE The following information assumes that all distributions made by the Fund in the periods shown were reinvested in additional securities of the Fund and does not take into account sales, redemption, distribution or other optional charges that would have reduced returns. Past performance does not necessarily indicate how the Fund will perform in the future. Year-by-Year Returns The bar chart shows the Fund s annual performance for each of the years shown, and illustrates how the investment Fund s performance has changed from year to year. In percentage terms, the bar chart indicates how much an investment made on January 1 would have grown or decreased by the December 31 of each year shown. 40% 20% 0% * * -0.1% Annual Compound Returns The table shows the annual compound total returns for each of the periods shown ended December 31, The returns are compared against the benchmark(s) over the same period. 1 Year 3 Years 5 Years 10 Years Since Inception Series PF Units N/A N/A N/A N/A 0.1% MSCI World Index (Net of Dividends) N/A N/A N/A N/A 4.2% MSCI World Index (Gross of Dividends) N/A N/A N/A N/A 4.3% For a definition of the benchmark(s), please refer to Benchmark(s) Information at the end of the section. -20% -40% * 2016 Series PF return: October 3 to December 31

11 Series T (AS AT DECEMBER 31, 2016) FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the fiscal periods ended December 31. Net assets per unit (1) Net assets beginning of period $16.04 $15.59 $15.38 $13.55 $12.58 Increase (decrease) from operations: Total revenue Total expenses (0.36) (0.41) (0.39) (0.37) (0.36) Realized gains (losses) for the period Unrealized gains (losses) for the period (1.78) (2.18) (1.08) Total increase (decrease) from operations (2) (0.82) Distributions: From income (excluding dividends) From dividends (0.23) (0.28) (0.25) (0.20) (0.23) From capital gains (0.11) (0.35) Returns of capital (1.28) (1.25) (1.23) (1.08) (1.01) Total annual distributions (3) (1.62) (1.88) (1.48) (1.28) (1.24) Net assets end of period $13.67 $16.04 $15.59 $15.38 $13.55 Ratios and supplemental data: Total net asset value ($ millions) (1) $0.56 $0.71 $0.28 $0.42 $0.41 Number of units outstanding 40,680 44,311 18,008 27,284 30,281 Management expense ratio (2) 2.51% 2.53% 2.54% 2.61% 2.67% Management expense ratio before waivers or absorptions 2.51% 2.53% 2.54% 3.41% 3.61% Trading expense ratio (3) 0.07% 0.13% 0.10% 0.18% 0.11% Portfolio turnover rate (4) 33.17% 58.84% 38.14% 61.39% 47.85% Net asset value per unit $13.67 $16.04 $15.59 $15.38 $13.55 For explanatory notes, please refer to Explanatory Notes to Financial Highlights at the end of the section. The opening net assets have been adjusted in accordance with IFRS without restatement of prior periods. Information pertaining to years 2012 and prior was derived from the audited annual financial statements prepared under Canadian GAAP. PAST PERFORMANCE The following information assumes that all distributions made by the Fund in the periods shown were reinvested in additional securities of the Fund and does not take into account sales, redemption, distribution or other optional charges that would have reduced returns. Past performance does not necessarily indicate how the Fund will perform in the future. Year-by-Year Returns The bar chart shows the Fund s annual performance for each of the years shown, and illustrates how the investment Fund s performance has changed from year to year. In percentage terms, the bar chart indicates how much an investment made on January 1 would have grown or decreased by the December 31 of each year shown. 50% 25% 0% -25% * % 17.7% 24.1% 11.6% 15.4% -4.4% Annual Compound Returns The table shows the annual compound total returns for each of the periods shown ended December 31, The returns are compared against the benchmark(s) over the same period. 1 Year 3 Years 5 Years 10 Years Since Inception Series T Units 4.4% 7.2% 12.5% N/A 8.9% MSCI World Index (Net of Dividends) 3.8% 12.2% 16.7% N/A 14.3% MSCI World Index (Gross of Dividends) 4.4% 12.8% 17.3% N/A 15.0% For a definition of the benchmark(s), please refer to Benchmark(s) Information at the end of the section. -50% * 2011 Series T returns: June 24 to December 31

12 EXPLANATORY NOTES TO FINANCIAL HIGHLIGHTS NOTES TO FINANCIAL HIGHLIGHTS Net Assets per Unit: (1) This information is derived from the Fund s audited annual financial statements. In the period a fund or series is established, the financial information is provided from the date of inception to the end of the period. In cases where the net assets per unit presented in the financial statements differ from the net asset value calculated for Fund pricing purposes, an explanation of these differences can be found in the notes to the financial statements. (2) Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase/decrease in net assets from operations is based on the weighted average number of units outstanding over the fiscal period. This table is not intended to be a reconciliation of opening and closing net assets per unit. (3) Distributions were paid in cash or reinvested in additional units of the Fund or both, and exclude distributions of management fee reductions to unitholders. Ratios and Supplemental Data: (1) This information is provided as at the period-end of the year shown. On June 24, 2011, Bissett Multinational Growth Fund merged into Franklin World Growth Fund. The merger was enacted to enable to streamline its product offering, allocate operational costs across a larger portfolio base and provide the continuing funds with a portfolio of greater value, allowing for increased portfolio diversification opportunities. Unitholders of Bissett Multinational Growth Fund received securities of Franklin World Growth Fund on a dollar-for-dollar and series-by-series basis. Consequently, Series A, F and T versions of the latter fund were launched to accommodate this merger. BENCHMARK(S) INFORMATION MSCI World Index (Net of Dividends) measures the total return of equity securities available in developed markets globally. The Index comprises approximately 1,335 companies, which represent 23 countries. The Index assumes investors receive dividends net of withholding. Index returns are shown in Canadian dollars. MSCI World Index (Gross of Dividends) measures the total return of equity securities available in developed markets globally. The Index comprises approximately 1,335 companies, which represent 23 countries. The Index assumes investors receive dividends free of withholding. Index returns are shown in Canadian dollars. (2) Management expense ratio is based on total expenses for the stated period and is expressed as an annualized percentage of daily average net asset value during the period. (3) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of net asset value during the period. (4) The Fund s portfolio turnover rate indicates how actively the Fund s sub-advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling each security in its portfolio once in the course of the relevant period. The higher the portfolio turnover rate in the period, the greater the trading costs payable by the Fund and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. OTHER FUND INFORMATION Reported year-by-year returns for past years may be revised, based on the results of recalculations, audits and/or other historical review processes. Such revisions are considered immaterial to performance disclosure unless otherwise stated. CFA and Chartered Financial Analyst are trademarks owned by CFA Institute.